Job Costing

Q.Define Job Costing? What are its features?
Job costing is a method of ascertaining cost in those industries in which goods are manufactured or services rendered against specific orders form customers.

Each work order or job order accepted is a cost unit

Costs are ascertained separately for each job or work order undertaken.

The purpose of hob costing is to ascertain the cost and profit on each individual job.

Examples:
printing press, repair, workshops, general engineering companies, interior decoration etc.

Salient features of job costing are:

1. production is always against customers orders and for stocks
2. each job has its specialty
3. each job undertaken is a cost unit
4.separate job cost sheet is prepared for each job in order to ascertain profit/loss on the job.
5.there will be no uniformity in flow of production between departments.

C3 Limitations of Financial Accounting

Q. Explain the Limitations of Financial Accounting. Do you think that these limitations have been overcome by the introduction of cost accounting?

Ans.Limitations of Financial accounting are:
1. Provides only limited information: 
2. Treat figures as single, simple and silent systems
3. Provides only a post mortem record of business transactions
4.Considers only quantifiable information
5. Fails to provide informational needs of different levels of management


Importance of cost accounting:
Whatever may be the type of business, it involves expenditure on materials, labour, and other items required for manufacturing and disposing of the product.

Moreover, a big business requires delegation of responsibility, division of labour and specialisation.

Management has to avoid wastage at each stage, like machine idle, efficient labour, proper utilisation of by products is made and costs are properly ascertained.

Besides that management, creditors and employees also benefitted in numerous ways by installation of good costing system in an industrial organisation.


Cost accounting as an aid to management:

Cost Accounting provides invaluable aid to management.

Adequate costing data helps management in reaching certain important decisions such as, whether hand labour should be replaced by machine, whether a particular product line should be discontinued or not etc.

Costing checks recklessness and avoids occurrence of mistakes.

As an aid to management , it provides invaluable information to enable management to maintain control over stores and inventory, to increase efficiency of the business, and to check wastage and losses.